DOE targets 10 ailing electric coops under ‘receivership’ status

At least 10 electric
cooperatives (ECs) labeled to be of “ailing status” are being targeted by the
Department of Energy (DOE) to be placed under “receivership status” so they can
be infused with much-needed financial succor and systems of efficiencies in
their management.

One of these electric
cooperatives, according to Energy Secretary Alfonso G. Cusi, is on extreme
financial hemorrhage with estimated R10 billion worth of indebtedness – the
Lanao del Sur Electric Cooperative (LASURECO) in Mindanao.

ALECO was earlier
privatized with San Miguel Energy Corporation giving it much-needed shot in the
arm – both financially and technically. But there are still problems hobbling
this power utility’s operations until now.

A “receivership
arrangement” may be enforced by the government when a certain power utility or
EC is validated or audited to be of decrepit state or financially crippled
condition.

Cusi said the
government draws its ‘step-in rights’ into these electric cooperatives under
Republic Act 10531 or the revised Charter of the National Electrification
Administration (NEA), an agency under the energy department.

The law prescribes that
NEA could take several options under its “step-in” power which is akin to a
“receivership process” set by a governing entity – and these could take the
form of “take over” of the ECs; or private sector participation (PSP) option
through competitive bidding after the terms of reference (on case-to-case
basis) had been established.

The energy chief
indicated that these ailing ECs reached such a feeble state because they are
being mismanaged by what he calls “ninja operators” or a set-up to be of highly
politicized nature.

“We are addressing that
issue – we’re looking at options and studying them. We can turn them into
voting stocks or corporatize them with the step-in rights accorded to NEA with
the imprimatur of the DOE,” Cusi noted.

He qualified that for
“these ailing ECs, we can place them under receivership, then we prepare them
into a transition toward the entry of private sector takers…that’s part of the
option we’re looking at, to inject capital into them.”

The energy secretary
said the identified poorly managed ECs have been undergoing audit that will
also be followed by a revalidation process by the NEA. From that phase, the
government will assess if a receivership option shall be pursued.